Wednesday, October 11, 2006

Major League Baseball – 2006 Attendance Trends III

Major League Baseball established a single season attendance record for the third consecutive season, more than 76 million attended MLB games for the first time in Major League Baseball history. The first part of SBN’s look at attendance trends (focusing on the 2006 season, while at the same time looking back at the last five seasons for each respective franchise), looked at the New York Mets, New York Yankees, Los Angeles Dodgers, Los Angeles Angels, San Diego Padres, Milwaukee Brewers, Pittsburgh Pirates, Cincinnati Reds, Texas Rangers, Houston Astros, Florida Marlins and Tampa Bay Devil Rays.

The second part of SBN’s look at attendance trends (focusing on the 2006 season, while at the same time looking back at the last five seasons for each respective franchise), looked at the Chicago Cubs, Chicago White Sox, Oakland A’s, San Francisco Giants and the Detroit Tigers.

Toronto Blue Jays owner Ted Rogers added $26 million to the Blue Jays payroll in 2006. Blue Jays general manager JP Ricciardi signed two free agents prior to the 2006 season, reliever B.J. Ryan and starting pitcher A.J. Burnett. The Jays won 87 games in 2006, seven more then they won in 2005. The Jays finished in second place in the AL East, 10 games behind the Yankees, and a game ahead of the Red Sox. Blue Jays management did their best to position the teams’ second place finish as an important step forward for the organization. When you’re in the same division as the Red Sox and the Yankees finishing ahead of either team is progress.

Long gone are the years (1991 through 1993) where the Jays not only became the first Major League Baseball franchise to surpass 4 million fans in a single season, but won the 1992 and 1993 World Series, with the biggest payroll in baseball – just north of $50 million each year. The Yankees $200 million payroll led baseball in 2006. At $71,915,000, the Jays had the 16th highest payroll in MLB. The Blue Jays sold 2,302,182 tickets this year, an average of 28,422 fans per game or 56.3 percent of the Rogers Centre capacity this year. A year earlier and an 80 win season produced 1,977,949 tickets sold, an average of 24,724 fans per game or 48.9 percent capacity. The Blue Jays payroll in 2005 -- $ 45,719,500.

In understanding the Toronto market one has to appreciate corporate Toronto (for that matter corporate Canada) only places real value in National Hockey League tickets. With just over 19,000 seats in Toronto’s Air Canada Centre (the home of the Toronto Maple Leafs), there is room in the marketplace for the Blue Jays. However, a contending team remains a key to the Blue Jays long-term success. In 2004, the Blue Jays won 67 games and sold 1,900,041 tickets, an average of 23,457 fans per game or 46.4 percent capacity. Jays’ payroll in 2004 -- $ 50,017,000. In 2003, the Jays won 86 games, well behind the Yankees and the Red Sox, with a payroll of $ 51,269,000. In 2003 the Jays sold 1,799,458 tickets, an average of 22,215 fans per game or 44.0 percent capacity. The real question that has yet to be answered in Toronto, if the Blue Jays payroll remains around $50 million, the Jays win 75 games will they continue to sell around 1.8 million tickets a season. In reality, the Jays won seven more games in 2006, added $26 million to their payroll and sold 324,233 additional tickets. That’s a great deal of payroll for only 324,000 additional tickets. Rogers has promised an even bigger payroll for Ricciardi and the Blue Jays in 2007. Here’s a safe bet – if Rogers agrees to increase the Blue Jays payroll to $80 million, the Jays better contend (if not win the AL east) and sell close to 2.8 million tickets in 2007, or it might not make sense for Rogers to spend, spend, and spend more money on the Blue Jays payroll.

One group of very upset fans are the longtime supporters of the Baltimore Orioles. A promotion dubbed “Free the Birds” organized by a Baltimore radio station saw 1,000 people who purchased tickets to that night’s Orioles – Detroit Tigers late season game walk out of that game as a sign they where fed up. Orioles’ fans reprised the classic line from the 1976 movie “Network” “I'm as mad as hell, and I'm not going to take this anymore!”

The Orioles' total attendance in 81 home dates was 2,153,139 for the season. The average attendance was 26,582, the fifth lowest in the American League. The total, down nearly a half-million fans from last season, represented the lowest in the 15-year history of Camden Yards, and the lowest for the club since 1988.

The Orioles won the A.L. East title in 1997 with a $64 million payroll, second in the major leagues to the Yankees’ $67 million. The Orioles’ payroll remained second to the Yankees the next two years, but then began plummeting — in successive seasons to 5th, 12th, 14th, 15th and 21st in 2004. Orioles owner Peter Angelos reaction to the much ballyhooed fan protest -- “We’re doing the best we can with a $75 million payroll,” Angelos said. “It’s tough to deal with teams that have double the payroll or triple. We expect to be increasing that payroll to compete.”

How much of an increase?

“In order to be competitive in the American League East,” the owner said, “you have to spend $100 million at a minimum, unless you push the right buttons and have the insight that Billy Beane and Terry Ryan has.”

Peter Angelos can take this to the bank – Orioles fans are fed up and in particular they’ve had enough of his ownership style. The biggest problem with the comments Angelos made after the fan protest was in how arrogant and aloof his opinions made him appear to be. In Baltimore the consumer has lost complete confidence in the product Angelos is selling. That is a recipe for disaster if you’re the owner of a professional sports franchise in terms of selling tickets.

In Boston, it was the same old, same old. The Red Sox sold out their entire 2006 home schedule. The Red Sox accomplished that feat for the third consecutive season. The last time the Red Sox did not sell out a game at Fenway Park – May 15, 2003. The Red Sox average ticket price for the 2006 season, $46.46 the most expensive average ticket price in Major League Baseball.

In a classic case of supply and demand, the best barometer for how hot any ticket is to a sports event is often determined by the capacity of the facility. Fenway Park has a capacity of 35,692 for day games and 36,108 for night games, the smallest in Major League Baseball. Red Sox management have leveraged Fenway’s capacity, the success the Red Sox have enjoyed on the field in the last decade, to drive the cost of Red Sox tickets into the stratosphere.

According to Team Marketing Report, the Red Sox average ticket price for the 2006 season is $46.46 the highest in Major League Baseball. TMR’s Fan Cost Index, which estimates what it would cost a family of four to attend a sports event pegs the FCI at Fenway for the 2006 season at $287.84. The cost of tickets increased by a modest 4.27% at Fenway this year. After winning their first World Series in 86 years, Red Sox tickets increased by 9.30% in 2005 to a league leading average ticket price of $44.56. The average ticket price for Red Sox games in 2004 was $40.77. 2003 -- $38.59. 2002 -- $39.68 (the first year under the teams’ current ownership group). According to TMR the Red Sox have had the highest average ticket price since the 1998 season. The Yankees had the highest average ticket price in 1997 -- $18.36. The Red Sox average ticket price nine years ago, in 1997 stood at $17.93.

In the last nine years, the average Red Sox ticket price has increased by more then 250 percent. The ever evolving secondary ticket market had to have opened many eyes in the Red Sox front office in September. Yes the Red Sox managed to sellout their September home games, but hundreds of tickets were available at face or less then face value through the secondary ticket market. On August 17 the Red Sox where 1.5 games behind the Yankees. Two weeks later the Red Sox where 8 games behind the Yankees as August turned to September. The Red Sox where 6.5 games out of the wild card playoff spot – to Red Sox fans the season was over.

If the law of supply and demand applies to Red Sox tickets, it appears Red Sox Nation is about to send a sobering message to John Henry and the teams’ management group – we’re prepared to pay the price your demanding for tickets but you better deliver a winning team each and every year.

Jacobs Field is one of the greatest single examples of the law of supply and demand, or at least it was. The Cleveland Indians sold out the first 455 games they played at “The Jake”. Located in the heart of downtown Cleveland, adjacent to the Quicken Loans Arena, the home of the Cleveland Cavaliers, The Jake’s capacity is listed at 43,345. Before the 1994 season the Indians played their home games at the Cleveland Municipal Stadium (better known as The Mistake on/by the Lake). By the time the stadium hosted its last sports event, the facility had driven the original Browns to Baltimore and the Indians nearly followed. At 78,000 seats The Mistake by the Lake had too many seats.

Every honeymoon ends, and the numbers in Cleveland since the streak ended on April 4, 2001 have been ‘interesting’. In 2006 the Indians sold 1,998,070 tickets, an average of 24,667 fans per game or 56.9 percent capacity. In 2001 (the sellout streak ended on April 4, 2001) the Indians attendance drop was insignificant, selling 3,175,523 tickets, averaging 39,694 fans per game or 92.6 percent capacity. In 2002 the drop in ticket sales became a clear and immediate danger for the Indians. The team sold 2,616,940 tickets, averaging 32,307 fans per game or 75.4 percent capacity. In 2003 the Indians fell to 24th in MLB ticket sales with 1,730,002 tickets sold, an average of 21,358 fans per game or 49.2 percent capacity. In three full seasons, the Indians had lost 50 percent of their fan base. In 2004 the Indians sold 1,814,401 tickets, averaging 22,400 fans per game or 51.6 percent capacity. In 2005 the Indians sold 1,973,185 tickets, averaging 24,664 fans per game or 56.8 percent capacity. Between 1995 and 2001 (the sellout seasons, the Indians won six division titles, and won the American League pennant in 1997. In that seven year period the Indians averaged 93 wins per season. Since the 2002 season, the Indians had one winning season (2005 – 93) and averaged 78 wins per season. Not only did the ‘experience’ of attending a game at The Jake come to an end, but a losing team directly correlated to an attendance drop just south of 40 percent for the five year period. One of the greatest challenges any sports franchise can face is losing their fan base (the loss of consumer confidence) and winning back a lost generation of fans. Clearly the Indians have to return to their winning ways of the late 1990’s, not their recent losing seasons.

In the coming days SBN will conclude its look at how each MLB team faired at the box office in 2006 and trends for each teams attendance in the last five years.

For Sports Business News this is Howard Bloom

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